Summer is traditionally a busy time for buyers and sellers. This year has been no
exception—and with lower interest rates, many homebuyers are finding the
competitive environment challenging. With multiple buyers competing for
properties, even terrific offers are often being outbid.
Fortunately, there are some things you can do to make your offer more attractive
to the sellers and increase the chances of getting the property.
• Have Full Pre-Approval – A step beyond pre-qualification, a pre-approval
involves submitting your full application to underwriting. Your lender will
collect all your financial data and submit for review. This is stronger than a
pre-qualification; a pre-approval requires the buyer to provide the proof of
their ability to qualify for the loan.
• Increase the Earnest Money – Earnest money is the deposit held in escrow.
While the contract will dictate how monies are disbursed in the event of a
cancellation, increasing the amount offered can show the seller you’re
serious.
• Add an Escalation Clause – In a bidding war, it can be difficult to know what
to offer because you want to outbid the competition without going too
high. An escalation clause is one way to automatically outbid the others.
The clause typically offers an amount—$1,000 for example—higher than
any verifiable offer up to a specific amount. This can ensure yours is the
highest offer.
• Pay any Appraisal Shortage – When offering more than asking price, sellers
become concerned about the appraisal coming in too low. If you are willing
to pay over market value, include the amount of shortage you are willing to
pay.
• Remove Inspection Contingency – This option can be tricky, but if you are
planning a large remodel or are willing to tackle any defects found, then
you can make your offer stronger by accepting the home as-is.
In this fast-moving, competitive real estate market, it’s important to make your
offer stand out from the crowd. These strategies are great ways to demonstrate
to the sellers that you’re serious about buying their home, increasing the chance
of having your offer accepted.
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